A home loan is the biggest financial commitment most families make. Understanding how lenders decide and how the loan behaves over 15–25 years can save lakhs of rupees.
How much can you borrow?
Lenders look at your income, existing EMIs, age, credit score and the property. A common rule is that all your EMIs together should stay within 40–50% of your take-home income. Banks also lend only up to a share of the property value (the loan-to-value ratio), set by RBI rules: up to 90% for smaller loans and lower percentages for larger ones. The rest is your down payment.
Fixed or floating?
Most Indian home loans are floating, linked to an external benchmark such as the RBI repo rate. When rates fall, your EMI or tenure falls; when they rise, it rises. Fixed-rate loans give certainty but usually cost more and are often fixed only for the first few years.
Plan the EMI properly
- Use our EMI calculator to test your budget at today's rate and at 1–2% higher.
- Keep six months of EMIs as an emergency fund.
- Do not stretch the tenure just to buy a bigger home. A longer loan costs far more in interest.
Tax benefits (old tax regime)
- Up to ₹2 lakh a year deduction on interest for a self-occupied home under Section 24(b).
- Up to ₹1.5 lakh on principal repayment under Section 80C, within the overall 80C limit.
- Joint borrowers who are co-owners can each claim within their own limits.
The new tax regime does not allow these deductions for a self-occupied home, so compare both regimes each year. Tax rules change, so confirm with your tax adviser.
Documents lenders ask for
- KYC, income proof (salary slips, ITRs, bank statements), and for self-employed, business financials.
- Property papers: sale agreement, title chain, approvals, and for projects, RERA registration and the builder's tie-up.
Tip:Check your credit score before applying. A score above 750 usually gets the best rates.
Prepay smartly
Banks cannot charge prepayment penalties on floating-rate home loans to individual borrowers. Small extra payments early in the loan cut interest sharply. When you prepay, ask the bank to reduce the tenure rather than the EMI to save the most.
Get help
Our home loan partners can compare offers from several banks. Tell us your property and income, and we will help you find a loan that fits.
Frequently asked questions
What credit score do I need for a home loan?
Most lenders prefer 700+, and 750+ usually gets the best rates.
Is there a penalty for prepaying a home loan?
Not on floating-rate home loans taken by individuals. Fixed-rate loans may carry charges.
Can I claim tax benefits in the new tax regime?
Not the interest and principal deductions for a self-occupied home. Compare both regimes before choosing.
This article is general information, written in November 2026, and is not legal, tax or financial advice. Rules, rates and limits change; please confirm the current position with the authority concerned or a qualified professional before you act.
